Bubble Gone `Bust'
Bubble Gone `Bust', Developers Build On Dream With Free Gifts To Attract A Market
With the Sensex taking one tumble after the other and amid a liquidity scare in the banking sector, the real estate industry is coming up with novel ways to attract a market that is slowing down.
Sources said the market has gone down, especially in the suburbs, to an extent that as opposed to 50 to 100 flats booked each day in Gurgaon this time last year, Thursday recorded not a single booking.
Therefore the freebies, say experts.
Jaypee Group has, for instance, offered a car for every flat booked at its housing projects in Noida and Greater Noida. In the Jaypee Greens project at Greater Noida, one can get a Maruti Swift, a BMW, a Mercedes or a Toyota Land Cruiser as gift, depending on the category of flats bought.
"If the value of a villa is Rs 4 crore and you get a Mercedes worth Rs 25 lakh, it is actually a discount being offered by the developer instead of reducing the price of the flat, or offering a cash discount," a real estate developer, who did not wish to be identified, said. "Developers are not giving actual cash discounts because they do not want the value of property to come down -- they want the real estate bubble to exist."
A real estate expert in NCR said transactions have "literally stopped" due to primarily two reasons: the jacked-up prices on one hand, and home loan interests jumping from 7.2 per cent to 14 per cent in a matter of a couple of years. "While there is a genuine need for homes, they have become unaffordable," the expert said. "There is a requirement for 20 million homes in the country, annually."
But this potentially huge demand, he said, is being "killed" by the inflated prices and the interest rates showing no signs of driving down south.
With the Sensex taking one tumble after the other and amid a liquidity scare in the banking sector, the real estate industry is coming up with novel ways to attract a market that is slowing down.
Sources said the market has gone down, especially in the suburbs, to an extent that as opposed to 50 to 100 flats booked each day in Gurgaon this time last year, Thursday recorded not a single booking.
Therefore the freebies, say experts.
Jaypee Group has, for instance, offered a car for every flat booked at its housing projects in Noida and Greater Noida. In the Jaypee Greens project at Greater Noida, one can get a Maruti Swift, a BMW, a Mercedes or a Toyota Land Cruiser as gift, depending on the category of flats bought.
"If the value of a villa is Rs 4 crore and you get a Mercedes worth Rs 25 lakh, it is actually a discount being offered by the developer instead of reducing the price of the flat, or offering a cash discount," a real estate developer, who did not wish to be identified, said. "Developers are not giving actual cash discounts because they do not want the value of property to come down -- they want the real estate bubble to exist."
A real estate expert in NCR said transactions have "literally stopped" due to primarily two reasons: the jacked-up prices on one hand, and home loan interests jumping from 7.2 per cent to 14 per cent in a matter of a couple of years. "While there is a genuine need for homes, they have become unaffordable," the expert said. "There is a requirement for 20 million homes in the country, annually."
But this potentially huge demand, he said, is being "killed" by the inflated prices and the interest rates showing no signs of driving down south.